Sunday, March 20, 2005

More on Congressman David Hobson's 2/8/2005 letter

Doug -

Great work on the Blog. And very courageous, also.

Please post the following anonymously. I hate feeling like I should be afraid to sign my name, but in my opinion that's where we are at. Just ask Terry Hawkins, Bill Priedhorsky,Tom Meyer, or Al Sattelberger.

Thanks,

Post follows:

The letter of February 8, 2005, from Congressman David Hobson (R-7th Dist, OH and Chair, House Subcommittee on Energy and Water Development) to Energy Secretary Bodman (attachment 1) deserves more scrutiny than it has gotten. This letter was posted earlier on the Blog, but not very conspicuously (accessible only via a link).

Contrary to what most of us, in my opinion, believe about the impact of the then-current draft RFP on potential UC competition, Mr. Hobson asserts "It appears that the release of the draft RFP has resulted in limiting the competition to one bidder, the incumbent". He goes on to demand certain changes to the draft RFP, and closes with an unveiled threat, "I look forward to reviewing the final RFP and I expect to see some significant improvement in how the Government crafts this next contract. If we do not see several qualified bidders for this contract, I will direct the Department to revise the RFP in a manner designed to encourage rather than discourage competition". The changes demanded by Mr. Hobson were subsequently adopted as amendments to the draft RFP in three major respects: de-emphasis of science as an award criterion in the contract competition; a very large increase in the performance fee for a potential contractor "designed to bring into the bid process more commercial entities" [quote from Mr. Hobson's letter]; and, elimination of the requirement for the successful bidder to maintain the current pension benefits.

With regard to Mr. Hobson's demand to emphasize "management and industrial practices" at the expense of science and technology it is fair to ask at least two questions: first, what is the most important function of LANL if it is not to "foster world-class science [and technology]"; and, second, viewing the last several years at LANL as an exercise in enhancing management and industrial practices, what has been the success as measured by scientific and technological productivity?

With regard to the potential field of bidders for the contract, Mr. Hobson states "... many qualified bidders that expressed interest early in the process, including Lockheed Martin, Battelle, and the University of Texas, have decided to bypass an opportunity to bid .... I have no interest in any of the entities cited, other than to point out that these are competitive, world-class contractors who are in business to do business [sic - the University of Texas???] and they are voting with their feet ..." [italics mine]. In fact, Mr. Hobson's #1 campaign contributor in 2004 was Battelle Memorial Institute. His #2 contributor was one of the lobbying firms that Battelle retains. You could look it up on the following URL and related sites: (http://www.opensecrets.org/politicians/contrib.asp?CID=N00003725&cycle=2004). Mr. Hobson has also received regular contributions over many years from Lockheed Martin and Northrop Grumman as well as other potential bidders in the aerospace/defense field. Earlier this year Battelle and Lockheed Martin were among UC's potential competitors. Despite what they have said to the media, they still could be. Northrop Grumman apparently will compete.

The statement in Mr. Hobson's letter that the UCRS is "disproportionately generous compared to any other government contract or private company or, for that matter, for any Member of Congress" is at best a gross misrepresentation and at worst an outright prevarication. Pension benefits and salaries for Members of Congress are matters of public record (attachments 2 and 3). It is difficult to check other government agencies or contractors, but just for comparison I include military retirement benefits which are easy to check (see, for example, http://www.usmilitaryabout.com). Those interested in a brief quantitative comparison can see the analysis in the following paragraphs. The bottom line is, UCRS retirement benefits are good but not out of line with other defined-benefit programs for government employees, and certainly not better than those for Members of Congress (with the sole exception of UCRS service time greater than 34 years). Apparently DOE didn't check the facts, or were simply intimidated by Mr. Hobson - and, it is difficult to believe that Mr. Hobson doesn't know what his own benefits are.

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Analysis of defined-benefit packages for Members of Congress, the military, and UCRS:

In all three (MC's [FERS, see attachment 2], military, and UCRS) the defined-benefit retirement income is defined as a benefit percentage times highest average plan compensation (HACP, a UCRP term but one used similarly in all three cases - the average of the highest 3 years' income).

In all three cases the benefit percentage equals time in service times a multiplier.

For MC's and military retirees, the multiplier is 2.5, independent of any other factor.

For UCRP the multiplier is an age factor equal to 1.1 at age 50 and increasing linearly at .1 per month until it reaches a maximum of 2.5 at age 60.

MC's pension plan vests after 5 years service.

Military retirees are ineligible for pensions unless they have served 20 years.

UCRS vests after 5 years.

MC's are eligible to retire at age 62 with 5 years service, 60 with 10 years service, 50 with 20 years service, with a multiplier of .025 in each case.

Military people can retire at any age after they have served at least 20 years, with a multiplier of .025.

Minimum age for UCRS retirement is 50 with a multiplier of 1.1, which increases to 2.5 at retirement age 60 or older.

Salary for all rank-and-file MC's were $158,100 as of 1 JAN 2004.

Military base pay (and other compensation) depends on rank/rate and time in service. Examples comparable to LANL TSM's near retirement age are given below.

Average salary for a full-time LANL employee with 20 years service in 2003 was approximately $92,000 (n=3000); TSM with 30 years, $130,000 (n=350); and TSM with 40, $135,000 (n=30).

Examples:

A MC first elected at age 30 and retiring at age 50 in 2005 would have a pension of approximately 79k.

A Naval Academy graduate who served 20 years, made O-6 pay grade (Captain, equivalent to full Colonel) could retire in 2005 at approximately age 42 with a pension of approximately $47k.

A LANL employee with a HACP of $100,000, who joined LANL at age 30 and accumulated 20 years service credit could retire at age 50 with a pension of $22k.

A MC first elected at age 30 and retiring at age 60 in 2005 would have a pension of approximately $119k.

A Naval Academy graduate who served 30 years and made O-9 pay grade (Vice Admiral) could retire in 2005 at approximately age 52 with a pension of approximately 109k.

A LANL TSM with a HACP of $130,000, who joined LANL at age 30 and accumulated 30 years service credit could retire at age 60 with a pension of $98k.

A MC first elected at age 30 and retiring at age 70 in 2005 would have a pension of approximately $126k (the congressional benefit percentage maxes out at 80%, or 32 years service).

The military benefit percentage maxes out at 75% (30 years service). In principle the military numbers for 40 years service are the same as above, but 40 years service is a very special case.

A LANL TSM with a HACP of $135,000, who joined LANL at age 30 and accumulated 40 years service credit could retire at age 70 with a pension of $135k. The only advantage that UCRS enjoys over the others is that the benefit percentage continues to increase until 40 years of service credit (benefit percentage = 100%). Given the most recent figures an "average" TSM would have to have more than 34 years service time to surpass a MC's pension, and more than 30 to surpass a VADM.

Now the comment regarding "cleaning the palce out of everybody over 50" is out of line.

The figures given are no suprise. It gives Congressmen and Military people a double dipping bonus as it looks like age is not a factor in there retirement and they can get at 50 what most of us would not receive until 60+. Congressman Hobson is an idiot.

Thanks for the perspective. University of Texas acutally has a slightly better retirement than UC, using a 2.3 multiplier for service when age plus service years equal 80. Chevron/Texaco offers a defined benefit plan that amounts to 80% after about 30 years.Dupont has 100% at age 60 with 25 years of service. Many companies and universities offer solid retirements.The latest DOE contracts, however, for Idaho and Oak Ridge are much lower.

Did not mean to be unclear. I am not advocating that people leave, nor stay for that matter. Nor am I advocating that UC try to get those over 50 out. This is far too personal to offer advice.

My comment for a flat 2.5% is purely based on a non-scientific, casual poll of my co-workers. It seemed to indicate that most everyone over 50 who could afford to leave, with the help of say, a 2.5% multiplier, would do so.

I'm 50 and I would leave if the multiplier were 2.5%. But that's me. Has nothing to do with liking or disliking LANL, purely financial. I'm a random TSM, and I'm not really doing any "Great Science", so I'm sure LANL would get along just fine without me.

However, since the 2.5% multiplier likely won't happen, I will keep plugging along doing my job until I go "inactive" or retire. I must assume that the next contractor will have no use for me and will not offer me a job as I will fall into the "inactive" or retired category (based on the last I saw of the proposed RFP changes). Not a big demand for 50+ year old scientists and engineers elsewhere, so I'll likely have to figure out something else to do.

As far as Hobson, without knowing him, I suspect he is not really so different than any other MC. Where are Udall and Wilson, besides out of their league? Who knows, maybe they are doing "Great Government"?

Remember when no one over 40 could get a job?? Well the great baby boom has changed that. Gen X made the senority bias in pay scales obsolete. And there are millions of qualified workers in the baby boom era- so companies are willing to hire experience.

I accompanied a 20 yr. old going to a college job fair in Albuquerque this spring- I wasn't looking for myself. Raytheon and Lockheed-Martin both asked what I do (engineering) and asked me for a resume. So if we have to go 'inactive' or don't get picked up during the change-over- maybe there is hope for the over forty crowd.

2.5 multiplier? Not to rain on your parade, but DOE has veto power over any retirement incentives offered for LANL...

One might also ask, more significantly, where are Domenici and Bingaman, the Chair and ranking minority member of the Committee in the Senate with the same purview as Hobson's? These are supposed to be "our" people, yet I've seen very little action from them taking issue with Hobson's bullbleep.

It is true that INEL and Oak Ridge (both of whose contracts were recently acquired by Battelle) have seen their pension benefits drop. It also appears to be true that Battelle is experiencing personnel "issues" over this - check the Web.

Bill Priedhorsky was put on investigatory leave (with Terry Hawkins) for many weeks following "CREM Zero" (or was it "CREM One"???). When he returned to work, absolved of any wrongdoing, the job he had been offered as Deputy ISR Division Leader was no longer his.

I don't expect any of this to have any effect whatever on Hobson. The main point is information for the "us's" who may use the "Real Story" to combat the disinformation in the Hobson letter. Also, I think the MEDIA are beginning to pay attention to this blog, and maybe they will pick up on this part of the "Real Story".

It must have been an amazing thing for the folks from UC to see. They have not, I understand, used their management fee for UC research. All of a sudden, in one fell swoop, Ohio Supercomputing Center is given $15M -- almost TWICE what UC gets for their contract -- with basically no strings attached.

It's not like Ohio Supercomputing Center is any sort of leading light in the field, either. If DOE wanted to divert money to a university, there are certainly far better places for this much money. This was pork, pure and simple; it amazes me that the press has not looked at this particular transaction.

It is certainly hard to view Hobson as a disinterested third party, that's for sure.

For more information about where at least $6M went: http://access.ncsa.uiuc.edu/Releases/03Releases/12.03.03_OSC_Receiv.html

As a military Academy grad and retired officer, I need to correct the analysis presented above.First, Academy time does not contribute to active duty time. Second, to retire "in rank," you must serve for three years in that rank. There are exceptions, but they are rare. Third, promotion to O-6 (Captain or Colonel) typically happens around the 20-21 year mark in a career for most officers. If an officer retires at 20 years they are most likely to retire as an 0-5 (Commander or Lt Col). It is true that pension payments commence upon retirement from active duty. Lastly, retired officers are subject to recall for the rest of their life.

Thanks for clearing up the matter. I thought that for pay purposes (longevity) the time in the Academy counts. It does not contribute to active duty time. Only Regular Officers are subject to recall and than obligation ends at 75 years of age (all academy grads have regular appointments but not all officers do). Reservists who retire after a full career are not subject to recall.

You do retire in your permanent grade but formerly -- for higher ranks, O-6 and above -- the period of time between one's temporary and permanent rank was short.

Nanos was given his VADM upon retirement. Is he a retired VADM or a RADM (upper half)?

Academy time does not count for pay purposes. It counts as "longevity" that earns an extra device to be worn on your uniform. Any more, Academy grads no longer receive a regular commission upon graduation. They must earn their regular commission early in their career as do Officers from other commissioning sources. BTW, I didn't graduate from the Naval Academy.

Thanks for information on changes in regular commission. Having everyone compete for the regular commission is much more equable.

One difference between a career in the military and at Los Alamos that has not been mentioned is that in situations where an accusation has been levied against a person in the military, the accused, who is subject to the UCMJ, is provided full legal representation (Judge Advocates) until the matter is resolved. At Los Alamos, the accused mortgages his or her house, sells the family car, and pays taxes to support the Laboratory's legal staff and its stable of hired lawyers.

Again, dear senator, the facts seem to elude you: UC has not confirmed that they will even bid on the contract to run LANL. And, it seems quite obvious to everyone who can add one plus one that DOE is making it impossible for UC to continue to run the Lab. Perhaps the good ol' politicians think they are pulling the wool over our eyes, but their vision is narrow and they are fooling only themselves on the issues.

Please note - the calculation of military retirement benefits above DID NOT assume that Academy time counted as time in service for retirement (e.g., the USNA Captain retiring with 20 years at age 42 - he/she graduated from the Academy at age 22). With regard to when one may expect to make O-6, Elmo Zumwalt made RADM at age 42. It may be that 20 years is better than average to make O-6, but it isn't uncommon.